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$205 Million Convertible Note Offering | 9 Months Ended
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Feb. 28, 2014
$205 Million Convertible Note Offering | NOTE 19 — $205 MILLION CONVERTIBLE NOTE OFFERING During the current quarter, we sold $205 million of our 2.25% Convertible Senior Notes (the “Convertible Notes”) due December 15, 2020. In accordance with the agreement, we will pay interest at a fixed rate of 2.25% on the Convertible Notes semi-annually in arrears on June 15 th and December 15 th of each year, beginning on June 15, 2014. The Convertible Notes will mature on December 15, 2020. The net proceeds, totaling approximately $200.1 million, were used to repay $200.0 million in principal amount of unsecured senior notes due December 15, 2013, which had an interest rate of 6.25%. The Convertible Notes will be our senior unsecured obligations and will rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the notes; equal in right of payment to any of our unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. Upon issuance of the Convertible Notes, we bifurcated the $205 million principal balance of the Convertible Notes into a liability component of $184.3 million, which was recorded as long-term debt, and an equity component of $20.7 million, which was recorded as additional paid-in-capital. The liability component was recognized at the present value of its associated cash flows using an 3.92% straight-debt rate, which represents our interest rate for similar debt instruments at the date of issuance without a conversion feature, and is being accreted to interest expense over the term of the Convertible Notes. At February 28, 2014, the unamortized debt discount of the Convertible Notes was $20.1 million, which is being accreted to interest expense using the effective interest method over the term of the Convertible Notes. The notes will be convertible under certain circumstances and during certain periods at an initial conversion rate of 18.8905 shares of RPM’s common stock per $1,000 principal amount of notes (representing an initial conversion price of approximately $52.94 per share of common stock), subject to adjustment in certain circumstances. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, we will increase the conversion rate for a holder who elects to convert its notes in connection with such a corporate event in certain circumstances. We may not redeem the notes prior to December 20, 2017. We may redeem for cash all or any portion of the notes, at our option, on or after December 20, 2017 if the last reported sale price of our common stock has been at least 125% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the notes. If we undergo a fundamental change, holders may require us to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plusaccrued and unpaid interest to, but excluding, the fundamental change repurchase date. Upon conversion, the notes may be settled, at our election, in cash, shares of RPM’s common stock, or any combination thereof.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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